The IMF Grim Reaper is still at work

Ecuador is in the IMF's sights at the moment. Lara Merling explains in a piece from last month what they are setting up to do in Ecuador (After the Argentina Debacle, the IMF Endorses Weakening Capital Controls in Ecuador CEPR 12/18/2019). It's good on showing how deadly for emerging economies capital controls can be:

Ecuador introduced a series of measures to discourage capital flight and prevent speculative flows of capital back in 2007 by taxing outflows that did not meet the criteria of productive foreign direct investment (FDI). The measures have been successful in strengthening macroeconomic stability and raising revenues for the government. ...

The new bill passed by the Ecuadorian assembly [at the IMF's insistence] removes the provision on tax havens, shortens the wait period for some investments to be exempt from the tax, and withdraws it altogether for equity and security markets as well as financial investments.

The changes to the law effectively open the door to financial speculation. [my emphasis]

The results are vitually certain to be bad. At least for Ecuador and its people:

It is also stated in the IMF's Articles of Agreement that Fund resources cannot be used to “meet a sustained outflow of capital.” However, this is exactly what happened in Argentina, where $36.6 billion left the country as the IMF disbursed $44.5 billion. Sustained capital flight was undeniably a main contributor to the colossal failure of the IMF’s latest Argentina program.

It seems natural to ask under these circumstances, and given the context, why the IMF is pushing for measures that weaken Ecuador’s current capital controls. Since the tax on outflows already did not apply to productive, long-term investments, attracting more (real) FDI cannot justify these measures. On top of all this, the unpopular measures that the IMF demanded and that fueled massive protests earlier this fall have only been postponed. [my emphasis]